Shares in Fortis, the troubled Belgian bank that was partially nationalised earlier this week, rallied sharply this morning after the bank cancelled a landmark deal with Ping An, China's biggest insurer, and halted billions of euros worth of asset sales.

Fortis shares climbed as much as 11.2 per cent after the bank scrapped a €2.15 billion (£1.7 billion) deal to sell half its asset management arm to China’s Ping An Insurance. At the same time, the Dutch central bank blocked the sale of some ABN Amro assets to Deutsche Bank.

“This seems to indicate the deal with Deutsche Bank will not go through. This makes it easier to sell ABN Amro as a whole and they might fetch some more for it,” Fred Huibers of Haags Effectenkantoor, a Dutch asset manager, said.

The U-turn on asset sales comes just days after the Governments of Belgium, the Netherlands and Luxembourg rescued Fortis, the Belgian-Dutch bank, by pumping €11.2 billion into it.

Fortis has been the largest European victim of the global financial crisis. It was perceived to have made itself more vulnerable after it stretched itself last year to buy part of the ABN Amro, the Dutch bank.

Fortis was part of a consortium including Britain's RBS and Spain's Santander which split up ABN after trumping Barclays' offer for the bank.

Fortis said it would not proceed with the deal to sell half of its asset management arm to Ping An because of “severe market disruption and the ongoing uncertainty in the global capital markets.”

A Ping An spokesman said: “We accept the decision and totally understand the situation Fortis is now in.” Earlier this week, Ping Ang said that it would have to absorb larger-than-expected losses from its 5 per cent stake in Fortis, prompting analysts to slash the group’s 2008 profit estimates.

Fortis also said the Dutch central bank was withholding approval for the group’s sale of €709 million worth of ABN Amro assets to Deutsche Bank, pending further review.

The central bank made the decision because of the "exceptional circumstances on international financial markets, the uncertainty with regard to the future shareholder in ABN Amro and the implications of this uncertainty for all parties involved”, according to a Fortis statement.

If the sale to Deutsche Bank is scrapped, Fortis may receive a capital boost as the deal involves a loss of €300 million to Fortis.

The sale of the assets to the German bank were required by the European Commission as a condition of Fortis's takeover of ABN Amro, which it made in a consortium with Royal Bank of Scotland and Spain's Santander.

Fortis also said it had bought the remaining stake in Artemis Asset Management, the UK-based investment management firm, for €397.2 million in cash.

The fallout from the nationalisation of the giant Belgian bank continued to swirl as the Prime Minister of Belgium called on the bank to block a payment of up to €5 million to Herman Verwilst, Fortis's departing chief executive. The Prime Minister said Mr Verwilst and his executives had a "not very glorious record".

Meanwhile, the Dutch Finance Minister told the Dutch Parliament that his ministry was looking into whether there were risks that were not on Fortis’ balance sheet when it sought permission to take over ABN Amro a year ago.

The Finance Minister said that financial strength of Fortis was not as the Government had expected but said that he was “not talking about swindling” by Fortis.

Ping An bought 5 per cent of Fortis last year in the wake of a spree of high-profile investments by Chinese corporations in financial companies as diverse as Barclays, Britain’s third-largest banking group, and Blackstone, the quoted American private equity giant. However, the deal had not yet won Chinese government approval and the insurer had not paid for its stake.

Its stake in the Belgian financial services group would have had to be written down because of the 77 per cent drop in Fortis’ share price since then.

Analysts at HSBC said that abandoning the purchase with Fortis would also ease concerns over Ping An's health. "Abandoning the deal will help ease investor concern and effectively leave Ping An with double the amount of capital at the holding level it would have had, had the deal gone ahead. Besides, the management can shift their focus to the domestic fundamentals,” HSBC said in a note.

Shares of Ping An ended 3.4 per cent higher in Hong Kong on Tuesday, after falling nearly 11 per cent on Monday on fears of losses from the Fortis investment.

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